India Will Not Cap Foreign Investment In Pharma

India Will Not Cap Foreign Investment In Pharma

October 11th, 2011 // 1:23 pm @

After more than a year of intense debate, the Indian government has decided not to proceed with a proposal to place a 49 percent cap on foreign investment in its domestic pharmaceutical industry, The Economic Times reports.

The decision comes amid concerns that unhampered foreign investment would render India unable to pursue its policy of generating low-cost generics and secure manufacturing facilities to cope with epidemics and health emergencies. “There is a concern that their takeover by multinationals will further orient them away from the Indian market, thus reducing domestic availability of the drugs being produced by them. This may weaken competition leading to headroom for increase in domestic drug prices…” the Indian Department of Industrial Policy and Promotion wrote last year (see here).

In the last three years, multi-national drugmakers have increased their share of the Indian market to 25 percent from 15 percent, the paper writes. The increase reflected a wave of deals, including the $3.6 billion acquisition of Ranbaxy Laboratories by Japan’s Daiichi Sankyo; Mylan Laboratories’ $734 million acquisition of Matrix Laboratories and, more recently, Abbott Laboratories’ $3.72 billion purchase of Piramal Healthcare domestic drug formulation unit.

To quell concerns raised by the health and industry ministries, however, the high-level Planning Commission, which met with the Prime Minister, decided that foreign investment will be more closely scrutinized for at least six months following an acquisition by the Foreign Investment Promotion Board, the Times writes. After the FIPB implements any changes, the Competition Commission of India will conduct oversight, Planning Commission member Arun Maira tells the paper.

The compromise was actually hinted at when the Planning Commission began its review (back story). Drugmakers were heartened by the decision. “The government has sent the right message to provide a level playing field to both global and local players,” Pfizer India managing director Keval Handa tells the Times. “This will go a long way in helping growth of the domestic sector and ensure access to medicine,” DG Shah, secretary general of Indian Pharmaceutical Alliance, the trade group for Indian drugmakers, tells the paper.

Source: Pharmalot


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